A mixed reaction followed the Government's White Paper, "Opportunity For All In A World Of Change", which promised to have the "most extensive and competitive broadband market of any industrial country by 2005".
Karl Robinson, operations director of ISP Mistral, claimed the proposed £30m fund fell far short of what was needed. He said the general expectation in the market had been that the Government would spend £1bn.
"Britain is already behind the rest of the world in terms of broadband connectivity. This is another setback that will have a huge impact on the SME market.
"The Government should be thinking on a global scale, rather than trying to regionalise the Internet, or it will risk the UK falling even further behind the rest of the world," he claimed.
John Higgins, director general of the CSSA, said in a statement that the Government had recognised the importance of creating a broadband infrastructure but was not in control of the telecoms.
"Unless significant progress is made over the next 18 months concerning broadband Britain, the Government will need to consider stronger measures.
The future economic well-being of the nation cannot be compromised by Oftel's regulatory impotence and BT's current commercial strategy," he warned.
Government supporters included the Institute of Directors. Professor Jim Norton, head of the e-business policy unit at the IoD, claimed the move would improve the UK's competitive position.
"The [new infrastructure] should bring the advantages of cost-effective 'always on' broadband services to many small and medium-sized businesses that previously had little prospect of such access," Norton added.